Home sales in Canada increased by 1.3% month on month in March but activity is down by 22.7% compared with the same month last year, the latest estate agent index shows.

The national average sale price fell by 10.4% year on year in March to just over $491,000, according to the monthly report from the Canadian Real Estate Association (CREA).

The data also shows that the national average price is heavily skewed by sales in Vancouver and Toronto, two of Canada’s most active and expensive markets. Excluding these two markets from calculations cuts almost $108,000 from the national average price, reducing it to $383,000 and trimming the year on year decline to just 2%.

Sales are also down on a quarterly basis to their lowest quarterly level since the first quarter of 2014.

But month on month they increased in over half of all local housing markets, led by Ottawa and Montreal. Monthly sales gains were offset by declines in BC’s Lower Mainland, the Okanagan Region, Chilliwack, Calgary and Edmonton.

Actual, not seasonally adjusted, activity was down 22.7% from record activity logged for March last year and marked a four-year low for the month. It also stood 7% below the 10 year average for the month. Activity came in below year ago levels in more than 80% of all local markets, including every major urban centre except Montreal and Ottawa. The vast majority of year on year declines were well into double digits.

Government policy changes have made home buyers and sellers increasingly uncertain about the outlook for home prices, according to CREA president Andrew Peck. ‘The extent to which these changes have impacted housing market sentiment varies by region,’ he added.

The number of newly listed homes rose 3.3% in March. However, new listings have still not recovered from the 21.1% plunge recorded between December 2017 and January 2018, the largest month on month decline on record by a large margin.

With sales up by less than new listings in March, the national sales to new listings ratio eased to 53% in March. The long term average for the measure is 53.4% and a national sales to new listings ratio of between 40% and 60% is generally consistent with a balanced national housing market.

CREA chief economist Gregory Klump, pointed out that recent changes to mortgage regulations are fuelling demand for lower priced homes while shrinking the pool of qualified buyers for higher priced homes.

‘Given their limited supply, the shift of demand into lower price segments is causing those sale prices to climb. As a result, affordably priced homes are becoming less affordable while mortgage financing for higher priced homes remains out of reach of many aspiring move-up home buyers,’ he said.

Sales Rise Marginally in Canada But Prices are Down 10.4% Year on Year by Property Wire